Rising criminality a serious threat to businesses
Saturday, 17 April 2010
Syed Rizvi Newaz
The investment climate or a conducive environment for the functioning of businesses depend on many factors in a country. Specially, in Bangladesh, the same are dependent on the lending rate, state of infrastructures, macro economic fundamentals, political stability, costs of utilities, etc. In all of these counts, Bangladesh's position leaves a lot desired.
Nonetheless, the growth rate of the economy had been reasonable in the present decade and experts are of the opinion that the rate could be notably higher if the law and order conditions remained better. But as it is, the law and order situation in the country has become a cause of special concern for some time particularly after the transition from the caretaker government to the elected one. Now, such concern has peaked and businesses in particular are among the most worried about the declining law and order conditions and the retarding effects of the same on their businesses.
The government has been taking some satisfaction from the rise in the foreign currency reserve. Certainly a higher reserve is desirable but probably not in the backdrop of an economy stagnating otherwise. Latest figures show that the rise in the reserve is also linked to less imports of industrial raw materials. This phenomenon is indicative of constrictive production activities in the country and its linkages to less output, employment and income. The banks are having record surplus liquidity and the same is more reflective of the laggard pace of investment operations because in the absence of a fully developed capital make the banks play the lead role in investment activities in Bangladesh and the surplus liquidity of the banks suggest the downward rate of new investments. It is obvious additional investments are at the heart of the economy's expansion. Without these investments being made, the economy cannot grow.
But in many cases, existing industrial establishments or service industries are running far below their potential. Trading and associated activities are also down. Many reasons can be attributed to this slump specially the on going severe energy crunch. But bad law and order also needs to be recognized as a very serious current threat to businesses. It is no overstatement to say that extortionist activities -- directed against businesses -- are playing also a very damaging role in the dwindling production and trading activities. Persons with money are simply scared to invest their money in new ventures. There are other major disincentives to investment activities, but business operators have the feeling of not getting a reasonable return on their investment due to the extraordinary crime activities targeted against them. Therefore, many of them are considering it a prudent step to sit idle with their money in the banks rather than risking enterprises amid such rising criminality.
Extortionist demands and toll collection from gangsters now afflict most businesses across the country. The gangs are headed by crime czars who have the local name of 'top terrors'. They are seemingly invincible with their lethal arms, connections with the unscrupulous sections of the police and various political shelters. Thus, with a sense of immunity, they approach businessmen with their extortionist demands. Many are required to pay every month or on weekly basis to be allowed to conduct their businesses in some peace. But these demands keep on rising and in some cases have become so unbearable for businesses that their operators are heard saying in deep frustration that it is better to pull shutters down on their businesses permanently than to submit to such atrocious demands.
Apart from regular payment of extortion money, cases of sudden unusual demand for a one time big amount are also rising. In recent weeks, hardly a month seems to pass without news that a businessman has been slain for his failure to pay extortion money. Businesses cannot flourish in a situation like this. Regular payments to gangs bite deep into their profits and inflate their costs of operations. Therefore, many businesses are running well below their capacities.
The investment climate or a conducive environment for the functioning of businesses depend on many factors in a country. Specially, in Bangladesh, the same are dependent on the lending rate, state of infrastructures, macro economic fundamentals, political stability, costs of utilities, etc. In all of these counts, Bangladesh's position leaves a lot desired.
Nonetheless, the growth rate of the economy had been reasonable in the present decade and experts are of the opinion that the rate could be notably higher if the law and order conditions remained better. But as it is, the law and order situation in the country has become a cause of special concern for some time particularly after the transition from the caretaker government to the elected one. Now, such concern has peaked and businesses in particular are among the most worried about the declining law and order conditions and the retarding effects of the same on their businesses.
The government has been taking some satisfaction from the rise in the foreign currency reserve. Certainly a higher reserve is desirable but probably not in the backdrop of an economy stagnating otherwise. Latest figures show that the rise in the reserve is also linked to less imports of industrial raw materials. This phenomenon is indicative of constrictive production activities in the country and its linkages to less output, employment and income. The banks are having record surplus liquidity and the same is more reflective of the laggard pace of investment operations because in the absence of a fully developed capital make the banks play the lead role in investment activities in Bangladesh and the surplus liquidity of the banks suggest the downward rate of new investments. It is obvious additional investments are at the heart of the economy's expansion. Without these investments being made, the economy cannot grow.
But in many cases, existing industrial establishments or service industries are running far below their potential. Trading and associated activities are also down. Many reasons can be attributed to this slump specially the on going severe energy crunch. But bad law and order also needs to be recognized as a very serious current threat to businesses. It is no overstatement to say that extortionist activities -- directed against businesses -- are playing also a very damaging role in the dwindling production and trading activities. Persons with money are simply scared to invest their money in new ventures. There are other major disincentives to investment activities, but business operators have the feeling of not getting a reasonable return on their investment due to the extraordinary crime activities targeted against them. Therefore, many of them are considering it a prudent step to sit idle with their money in the banks rather than risking enterprises amid such rising criminality.
Extortionist demands and toll collection from gangsters now afflict most businesses across the country. The gangs are headed by crime czars who have the local name of 'top terrors'. They are seemingly invincible with their lethal arms, connections with the unscrupulous sections of the police and various political shelters. Thus, with a sense of immunity, they approach businessmen with their extortionist demands. Many are required to pay every month or on weekly basis to be allowed to conduct their businesses in some peace. But these demands keep on rising and in some cases have become so unbearable for businesses that their operators are heard saying in deep frustration that it is better to pull shutters down on their businesses permanently than to submit to such atrocious demands.
Apart from regular payment of extortion money, cases of sudden unusual demand for a one time big amount are also rising. In recent weeks, hardly a month seems to pass without news that a businessman has been slain for his failure to pay extortion money. Businesses cannot flourish in a situation like this. Regular payments to gangs bite deep into their profits and inflate their costs of operations. Therefore, many businesses are running well below their capacities.